Rising prices likely to keep BoE rate cuts on hold
Reducing the BoE’s benchmark rate to 4.5% from the current 5% would risk unacceptably high inflation, the central bank’s forecasts show.
By Bloomberg |
LONDON: Bank of England governor Mervyn King signalled he is about done cutting interest rates. King said on Wednesday he expects inflation to breach the government���s 3% limit for ���several quarters��� and the central bank���s forecasts show further rate cuts may make matters worse.
Reducing the BoE���s benchmark rate to 4.5% from the current 5% would risk unacceptably high inflation, the central bank���s forecasts show.
���It���s increasingly unlikely they���ll deliver rate cuts this year,��� said Ross Walker, an economist at Royal Bank of Scotland Group in London. Investors scaled back bets on further rate reductions after King���s comments, which came as evidence mounts that the housing- market slump is dragging down economic growth.
Chancellor of the Exchequer Alistair Darling backed the BoE���s inflation-fighting focus on Wednesday.
Reducing the BoE���s benchmark rate to 4.5% from the current 5% would risk unacceptably high inflation, the central bank���s forecasts show.
���It���s increasingly unlikely they���ll deliver rate cuts this year,��� said Ross Walker, an economist at Royal Bank of Scotland Group in London. Investors scaled back bets on further rate reductions after King���s comments, which came as evidence mounts that the housing- market slump is dragging down economic growth.
Chancellor of the Exchequer Alistair Darling backed the BoE���s inflation-fighting focus on Wednesday.
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